NHS told to slash procurement costs by minister

What has been described as "radical new blueprint" for "everything" the National Health Service buys has been unveiled by the UK government.

Health minister Dan Poulter has set out plans to save £1.5 billion, claiming that the government is putting an extra £12.7 billion into the NHS "but that money needs to be spent much more wisely by local hospitals". He added that the latter "must wake up to the potential to make big savings and radically change the way they buy supplies, goods, services and how they manage their estates".

Dr Poulter went on to say "we must end the scandalous situation where one hospital spends hundreds of thousands more than another hospital just down the road on something as simple as rubber gloves or syringes, simply because they haven’t got the right systems in place".

The Department of Health says that NHS reforms are already making £1.5 billion of back office savings each year by reducing unnecessary bureaucracy, but the new strategy sets out how to save more. The document setting out the reforms cites findings which show there is little consistency in the way the NHS spends money "and that very few senior people in NHS hospitals know what good procurement looks like".

It also finds an over reliance on ‘framework agreements’ at the expense of the NHS striking radical money-saving deals, like hospitals getting together to bulk-buy equipment for a discount. Dr Poulter set out a number of actions including the recruitment of a new NHS 'procurement champion' with private sector expertise and forcing hospitals to publish what they pay for goods and services.

The minister advocates setting up a ‘price index’ especially for hospitals, through which they will be able to see how much they are spending compared to others. He also called for cutting the temporary staff bill by 25% by the end of 2016 (it currently costs the NHS an "eye-watering" £2.4 billion every year.

The new scheme also recommends a plan for the DoH "to make the most of the market" by working with top NHS suppliers to strike bulk deals for equipment like radiotherapy machines and MRI scanners.

Commenting on the new procurement strategy, Mike Farrar, chief executive of the NHS Confederation, said a number of organisations within the service "are already doing great work to scrutinise the ways they can reduce the amount they spend on goods and services and plough that money back in to care". However, "many more could be much more efficient if they fully recognised the power of strength in numbers and came together to drive down costs".

Mr Farrar said it could also help commissioners, patients and taxpayers hold NHS providers to account for making the best use of their money "but the process of doing this needs to be helpful without being overly bureaucratic and must recognise providers' right to run their businesses in the way they believe is best for their patients".

He concluded by saying that procurement "is only one part of the challenge we face to improve efficiency in the health service. The things we need to do to make the NHS truly sustainable for the future will require some really tough choices about how and where we provide care".